PSALM v. MAUNLAD HOMES

Power Sector Assets and Liabilities Management Corporation (PSALM) Vs. Maunlad Homes, Inc.

G.R. No. 215933

February 8, 2017

FACTS:

National Power Corporation (NPC) set a public bidding for the security package in NPC MinGen. Among the participating bidders was San Miguel Protective Security Agency (SMPSA), represented by Labao. However, NPC's Bids and Awards Committee (BAC) disqualified SMPSA for its alleged failure to meet the equipage requirements. The disqualification prompted Labao, as the general manager of SMPSA, to bring a petition for certiorari against NPC and its officials in the Regional Trial Court (RTC) in Lanao del Norte.

On January 30, 2009, the RTC issued a temporary restraining order (TRO) directing NPC and its officials to desist from awarding the security package, as well as from declaring a failure of bidding. Then, on February 17, 2009, the RTC issued the writ of preliminary injunction enjoining NPC and its officials from committing said acts. And on August 17, 2009, the RTC, ruling in favor of SMPSA, made the injunction permanent, and granted other reliefs to SMPSA. In due course, NPC appealed to the CA.

In the meantime, on March 9, 2009, NPC and Power Sector Assets and Liabilities Management Corporation (PSALM) entered into an operation and maintenance agreement (OMA) whereby the latter, as the owner of all assets of NPC by virtue of Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act of 2001 (EPIRA), had the obligation to provide for the security of all the plants, assets and other facilities.

On April 7, 2010, PSALM received the TRO issued by the CA on April 5, 2010. It is noted, however, that Labao did not furnish PSALM a copy of SMPSA's Urgent Motion for the Issuance of a TRO and/or Preliminary Prohibitory Injunction. Notwithstanding the fact that PSALM was not a party in the case brought by Labao against NPC, and the fact that PSALM was not furnished a copy of Labao 's Urgent Motion for the Issuance of a TRO and/or Preliminary Prohibitory Injunction, the CA issued the assailed resolution granting the TRO in order to maintain the status quo, and expressly included PSALM as subject of the writ. Hence, PSALM has come to the Court by petition for certiorari, insisting that the CA thereby acted without or in excess of jurisdiction, or gravely abused its discretion amounting to lack or excess of jurisdiction by subjecting its company to the injunctive writ issued to NPC.

ISSUE:

Whether or not a non-party to a suit may be subjected to the injunctive writ issued against one of the parties.

HELD:

No. A non-party to a suit cannot be subjected to the injunctive writ issued against one of the parties. We cannot uphold the resolutions of the CA. First of all, Section 49 of Republic Act No. 9136, or EPIRA, expressly created PSALM as a corporate entity separate and distinct from NPC, to wit:

Section 49. Creation of Power Sector Assets and Liabilities Management Corporation. - There is hereby created a government owned and controlled corporation to be known as the "Power Sector Assets and Liabilities Management Corporation", hereinafter referred to as the "PSALM Corp.", which shall take ownership of all existing NPC generation assets, liabilities, IPP contracts, real estate and all other disposable assets. All outstanding obligations of the National Power Corporation arising from loans, issuances of bonds, securities and other instruments of indebtedness shall be transferred to and assumed by the PSALM Corp. within ninety (90) days from the approval of this Act.

Accordingly, the CA blatantly erred in holding that PSALM, without being made a party itself, was subject of the writ of injunction issued against NPC. PSALM and NPC, despite being unquestionably invested by Jaw with distinct and separate personalities, were intolerably confused with each other. Lastly, Labao was quite aware that under EPIRA, PSALM became the owner as early as in mid-2001 of all of NPC's existing generation assets, liabilities, IPP contracts, real estate and all other disposable assets, as well as all facilities of NPC. NPC MinGen was among the assets or properties coming under the ownership of PSALM. As such owner, PSALM was an indispensible party without whom no final determination could be had if it was not joined. An indispensable party is one who has such an interest in the controversy or subject matter that a final adjudication cannot be made in its absence without injuring or affecting that interest. As such, Labao should have impleaded PSALM in the proceedings in the RTC, or the RTC should have itself seen to PSALM 's inclusion as an indispensable party.

In fine, the CA unquestionably exceeded its jurisdiction in including PSALM within the coverage of the TRO and the writ of injunction issued against NPC. There is no question that as a provisional remedy to prevent irreparable injury pending the final determination of the action, injunction can bind only the parties in the action, or their privies or successors in interest. No person who has not been impleaded and duly served with the summons should be adversely affected by the outcome of the action. The principle that a person cannot be prejudiced by a ruling rendered in an action or proceeding in which it has not been made a party conforms to the constitutional guarantee of due process of law.